Radio GaGa

Too much work spilling over to the weekend, plus I need my weekly Wushu serial fix at 11 tonight. But you might want to keep an ear on Today at China Radio International, next Monday (July 9), 10:00AM JST. In the meantime, have a nice weekend.

Just sayin’.

Much Ado about Almost Nothing: or, So Much for DPJ Sanctions

The latest news from Yomiuri has Azuma Koshiishi stating in today’s regular press briefing that “it is impossible that [ex-Prime Minister Hatoyama] will not be an official candidate” if the lower house election occurs during his suspension period. There is a semantic discrepancy between this and his earlier statement just two days ago that one “cannot be an official candidate during the suspension period” that can be bridged only through the fourth dimension by assuming that Hatoyama (and all the other suspended lower house members for that matter) will be pardoned if and when the Noda cabinet calls a snap election within the next six months. In the meantime, Hatoyama et al will be allowed to attend DPJ meetings as “observers.” So the camel(s) will be peeing in the tent and all the while, everyone else pretends not to see it. All this is no doubt motivated by the very real fear that dissidents will pick up their marbles and walk out.

Verily, the political theatrics have been transformed in an instant from suspense to farce. Could Shakespeare have done any better?

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So I guess my question is, or would be if I were Ozawa and his diehard allies, “Did I act too hastily in exiting the premises?”

A Snap Election Is Certainly Doable in the Very Near Term

Philippe wonders in his comment to my previous post:

“Can a snap election actually be held that fast, given the constitutionality issues raised by the Supreme Court ? As far as I know, the relevant laws are still being held up (by the LDP and ... ?) in the lower house committees or intra party negotiations. Or will the LDP suddenly agree to the current proposals and help passing the laws at high speed through both chambers?”

That is a good question; a question which the media, apparently in their desire to sell an election, have mostly elided over. I believe that once the main political parties—the DPJ, LDP, Komeito and the Ozawa defectors—see that a snap election is inevitable, they will quickly pass a law that complies with the Supreme Court ruling on the unconstitutionality of lower house elections by eliminating five single-member districts—resulting in 475 seats consisting of 295 single-member-district and 180 proportional regional-district seats— while leaving the more drastic reforms for further negotiations after the snap election.

Could the Noda cabinet call a snap election without such legislation? Yes. No reputable constitutional scholar is likely to argue that the Emperor could place his legal judgment ahead of the cabinet and refuse to dissolve the lower house under Article 7 of the Constitution of Japan, a legal and political intervention that even a constitutional monarch would blanche at. More importantly, the Supreme Court will not vacate a general election that would leave us with a lower house devoid of members and an unconstitutional prime minister and cabinet and no constitutional means to repair this state of affairs. The Supreme Court will not endorse the election after the event, but it will declare it valid though unconstitutional. Now it is possible that citizen groups may sue to secure a provisional disposition postponing the election. I won’t say that there is zero possibility that the Supreme Court will grant such relief, but I do believe that it is extremely unlikely since the courts are not equipped to intervene with a constructive remedy that overwrites existing law in the case the Diet cannot come forward with its own resolution. (Imagine what the situation would be like if the issue remains unresolved until the current term is up.) The Noda cabinet will, however, be very reluctant to go this route. The wrath of the media and the public will fall largely on the Diet, but the Noda cabinet will also have to shoulder a significant part of the blame. Noda, moreover, will not want to go down in history for knowingly calling an unconstitutional election and undermining the legitimacy of the Japanese political system.

The Diet members are strong incented to table the other two elements, perhaps indefinitely. First, eliminating 40/80 lower house seats from the proportional regional districts may be a politically appealing act when advocating belt-tightening. But that means cracking a lot of eggs, and the eggs are not amused. Second, there is a strong institutional bias for consensus on parliamentary matters, but it is proving difficult to come up with a formula that satisfies/dissatisfies all the political parties. The DPJ has made a proposal that goes halfway in meeting the concerns of the smaller parties—the DPJ and LDP will be the ones giving up all the seats and perhaps more—and is believed to be aimed in particular at Komeito as a potential coalition partner. The post-election prospects for the two elements depend on the outcome of the election. It is easy to see that a grand coalition between the DPJ and LDP renders that an arrangement that favors large parties more likely, while a more fragmented political scene where the two compete for the support of the smaller parties to form a government favors the opposite arrangement. And of course, continued stalemate is always possible, which would mean that we would be due for another round of debates resulting in a minor patch after the next census in 2020.

Implications of the Two-Month Suspensions

Of the 19 lower house members who voted against the bill to raise the consumption tax* rate but elected to remain in the DPJ, Yukio Hatoyama received a six-month suspension reportedly because he was a former prime minister and leader of the DPJ while the other 18 each received a two-month suspension. So?

Assume that clock started running on the suspensions yesterday, when they held the DPJ leadership meeting to authenticate the decision that Yoshihiko Noda as DPJ Representative and Azuma Koshiishi as Secretary-General made, and Hatoyama’s suspension will be lifted on January 4 while the two-month suspensions will be lifted on September 4. Now, Noda is serving out the remainder of Naoto Kan’s two-year term as DPJ Representative, which ends on September 14. This means that the naysayers can vote against Noda in the DPJ Representative election. However, this means little; the ranks of the anti-tax hike have been greatly diminished by the Ozawa defections, while Noda already won a faceoff last September against the Ozawa candidate (remember Banri Kaieda?) on a pro-consumption tax hike agenda.

More important is the schedule for a snap election. SG Koshiishi has indicated that Diet members under suspension will not be designated as official DPJ candidates. According to the Japanese Constitution, a general election must be called within 40 days after the lower house is dissolved, so any suspended lower house member could be reinstated and designated as an official DPJ candidate by September 4 if the lower house is dissolve no later than August 29 (or 28, whatever; there are only so many minutes in the day and I’m not being paid for this). As a practical matter, though, the DPJ needs to designate its official candidates immediately or very soon after the lower house is dissolved so that it can put the full force of its resources behind its incumbents in what is sure to be an unpredictable, hard-fought and, for the DPJ, uphill election campaign. Therefore, Prime Minister Noda must wait until on or about September 4 before he rolls the dice on a snap election. Since the current Diet session runs until Setember 8, he must effectively hold out until its end.

There are three tools to consider in gauging the prospects for the opposition of forcing a snap election. The most potent is a lower house vote of non-confidence, which, under the Japanese Constitution, would force Noda to resign or call a snap election. The second is the para-constitutional upper house vote of censure, which is to the lower house vote of no confidence what porn is to real sex; it’s potency depends in large part on how desperately the media want a snap election—very badly in my view (snap election, not sex). And the third is rejection of a must-have bill, an act that requires a majority vote in the lower house or a majority in the upper house that cannot be overridden by a lower house super majority. The DPJ-PNP coalition maintained a safe majority even after the Ozawa defections. Momentum for an effective upper house censure motion needs a little time to build up. This leaves the rejection of a must-have bill as the most viable option for the opposition to force an early snap election (which I believe that they still want) since it has the necessary votes in the two Diet houses (and the eventual media support) to force it.

What does all this mean in terms of political tactics? The PDJ should take as much time as possible in moving the deficit bond authorization bill through the two houses, while the opposition should clear the legislative deck as quickly as possible so that it can submit the no-confidence motion that the media crave. Look, then, to the opposition to try to run the consumption tax and other related bills double-time through the lower house** while the DPJ becomes embarrassingly forthright in submitting the Noda administration to opposition grilling around the bill in the upper house; a turnaround, if I recall correctly, from the lower house process.

BTW Hatoyama really got shafted if there’s going to be a snap election earlier rather than later. The LDP the LDP will be putting up a former world-class speed skater (winter sports heroes are big in Hokkaido) and two-term prefectural assemblyman against Hatoyama, with Seiko Hashimoto, a much bigger speed skating national hero and three-term HOC and Hokkaido Chapter head for the LDP, spearheading the charge for him. I'd be running scared if I were Hatoyama. Looking at the results of past elections, he'll probably make it back, but I'd say that there's an undeniable opportunity for the LDP to knock him off with a strong candidate, in which case not being zombie-listed would be fatal.

(Note) * I’m tempted to call it VAT so people don’t mistake it for a sales tax. I complained because one news outlet whose name I shall not give you here because I do not bite the hand that feeds me (though it will be easy to figure out for people with elementary online search skills who can take a hint) used the term “sales tax” and got the explanation that it would be easier to understand.
** I’m still convinced that the LDP and Komeito want to go to the polls sooner rather than later despite any qualms over Toru Hatoyama and his Ishin-no-Kai’s potential. I may use some material from my end of an email exchange with friends to blog about this tomorrow if someone doesn’t dump a serious workload on me on top of a few other ongoing projects that I’m involved in.

A first-term “non-zombie DPJ HOR”—someone who got listed for one reason or another on the DPJ’s regional proportional list for the House of Representatives election in 2009 and made it in on the coattails of the dump-the-LDP landslide in 2009—on the list of 38 HORs that voted against the consumption tax hike bill on June 29 and let their names remain on the secession list on July 2, chickened out today (July 3) and rescinded his secession, a decision that the DPJ apparently welcomed with open arms (and a likely suspension). Tomohiko Mizuno, the repentant HOR, is a graduate from a dentist’s college that I’d never heard of before and his pre-HOR political career consists of one unsuccessful run for a prefectural assembly seat in 2007 when he was in his late forties, which suggests a character in need of serious handholding and caresses before you push him out the back of the plane for his first parachute dive. And Chobin Zukeran, a SMD member from Okinawa—another caution flag—has told the press, since it asked, that he will play the independent game for the time being.

All in all, it has been a horrible rollout for Ozawa. But what can he expect when the one guy that you have left who will do everything he can expect to do his bidding is the clownish, blustering Kenji Yamaoka?

In his defense, it probably was not just pure stupidity that led him to orchestrate the bum rush that he gave to the men and women who had entrusted their secession papers to Ozawa. No. He must have done that in large part because he knew that many of them would get cold feet if they had more than a moment to reflect on what they were doing. In short, he were doing what every cold-call salesmean, teleshopping hawkers and or other con mean does to make the mark commit before he/she hads a chance to think. In that’s sense, Yamaoka did take a page from the manuals of his erstwhile multilayered marketing patrons.

And maybe Ozawa is a “spent force” after all.

Rapid Reaction: The Ozawa Defection

Ozawa is a spent force, although he can still play a spoiler role in the Diet, complicating legislative affairs until at least the 2013 upper house (HOC) election. Look at how his lower house (HOR) support slipped as the going got tougher over the past week. On June 21, 49 HOR members of the Ozawa Group showed up at his soiree for hardcore opponents of the consumption tax hike. The same day, 45 HOR members, almost surely consisting of the soiree attendants, entrusted their party secession papers to Ozawa. On June 26, 57 HOR members from the DPJ voted against the tax-and-social security reform bill that includes provisions for the consumption tax hike. 46 of them had attended the June 21 soiree. On July 2, Kenji Yamaoka, Ozawa’s majordomo submitted to the DPJ the secession papers of 40 HOR and 12 HOC members. Two of the 40 HOR members denied that they had intended to secede, claiming that they had not been consulted before the submission. One other HOR member reportedly complained as well but was persuaded by Ozawa to stay the course on defection. There are some rumors that Ozawa sympathizers lie in waiting in the DPJ for just the right moment to defect and destabilize the Noda administration. But it is doubtful that such a clandestine undertaking can be conducted in absolute secrecy. Besides, these things are now or never; if you lose your nerve the first time around, it’ll be difficult to get yourself up for another try. It look like Ozawa’s allies backed bit by bit as the going got harder. Ozawa is surely stuck, give or take less than a handful, with what he has now*. In short, Ozawa underwhelmed; that’s bad optics. There will be a significant anti-consumption tax backlash at the polls come the snap election. But Ozawa’s candidates will have to share it with the policy-minded Your Party, whatever Hashimoto cooks up under the Ishin banner, and the relics of the Japanese left-wing. In fact, if I were a first-term HOR member who opposed the consumption tax hike bill, I’d try to run under the aegis of Your Party, or something that Toru Hashimoto, the charismatic Osaka mayor, cooks up under the Ishin banner. Seriously, I Can’t figure out a way for Ozawa to do anything more than to hang on to the troops that he still has until election day, when his party winds up lumped together with all the other small parties with just enough political capital to survive but not nearly enough to grow, It’s difficult to foresee the political HOR configuration of the post-eleciton regime. But the HOC picture is much clearer. Given the 12 defections, the legislative process will become much less flexible, making it much more difficult to do anything there without an agreement between the DPJ and LDP.

Farmland and Taxes (and a Little Bit of Death)

From today’s Outbox. Only the names have been changed, to protect the guilty.

French Intern J: Did Mr. K really say that “taxing farm zoned land out of existence in the suburbs of urban areas will somehow correct the fiscal imbalance and be a net benefit to Japan's economy”?

Tooth Fairy: Of course not. What he said, or intended to say, or would have said had he listened more carefully to the MOF officials that he talked to was something like this: “Farm zoned land should be taxed at market value like any other commercial real estate. That would raise fixed assets tax revenue for municipalities in urban areas and improve resource allocation. It won’t correct the fiscal imbalance by itself but it’ll help.”

French Intern J: That sounds sensible. Why don’t they do it? After all, there can’t be that many farmers in Metropolitan Tokyo to resist a change in the tax code, no?

Tooth Fairy: It’s more complicated than that. Farmland is governed by the Agricultural Land Act and requires the consent of the local Agricultural Commission and the prefectural governor to be converted to non-farmland. Some of the commissioners are nominated by the local agricultural cooperatives while others are elected by local farmers. The result is an opaque, time-consuming, and often politicized process. You have to flip this entire framework on its back if you are going to start taxing farmland like commercial real estate. The vested interests encrusted around the existing system may not be that large in number, but they’ll fight fiercely to defend their turfs, with a so-far predictable outcome. (You‘ve heard of Mancur Olsen?) If you want to know more, ask Aurelia George Mulgan. Or read her book; Dr. P has a copy. It’s about the size of two bricks and weighs about as much.

French Intern J: Are the taxes so low that the urban and suburban farmers aren’t incented to lobby the national government to change the law so that they can sell their land to real estate developers and make a fortune?

Tooth Fairy: Good question. But beyond the tax incentive that Mr. K talked about, inheritance law offers a huge incentive to the heir(s) to maintain inherited farmland as such until a deal comes along that makes it worthwhile to convert it to residential or commercial use. You have to change that too. Then there are people, including farmers, who’ll see the value of their commercial and residential real estate fall as ex-farmland floods the market. And I haven’t even talked about the externalities, including GHGs.

French Intern J: And you also said that the existing procedures are time-consuming.

Tooth Fairy: Which is why there are many cases reportedly of people just skipping procedures and going ahead and do it. The authorities will not come after minor infractions, and will often legitimize the fait accompli.

French Intern J: It sure is complicated. So Mr. K had all this in mind when he talked about taxes on farmland?

Tooth Fairy: I’m not so sure. You see, Mr. K can’t speak, much less read, Japanese. That means that, for things that English-language information is not available, he is at the mercy of his Japanese interlocutors who speak Japanese. But I don’t fault him for that. In my line of business, I am asked questions that should properly be beyond my ken, and I will be the first to admit that I have winged it, or even dissembled, when I thought that I could get away with it. It comes with the territory, and even academics also do it all the time when they face the TV camera or an op-ed deadline. So now you know where the veal comes from, so to speak. But you do ask good questions. Dr. P should give you a raise.

French Intern J: Mais je n'ai pas encore été payees!

Tooth Fairy: That’s Greek to me.

French Intern J: Actually, it’s French.

Tooth Fairy: Same thing.

French Intern J: I said, I haven’t been paid yet. So, can you do something about that?

Tooth Fairy: Sorry, no can do; I’m the Tooth Fairy, not a debt collector. And I only take baby teeth. Tell you what, I’ll contact Santa Claus; he might be able to help you in…oh, in another six months or so.

French Intern J: Thanks for nothing.

Tooth Fairy: *kids today*

Re the “Keynesian” and the “Institutional, Historical and Behavioral” Perspectives

Reproduced below with two minor edits are the relevant paragraphs in a memo that I prepared for an interview earlier in the week. Essentially a footnote to the previous post.

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As for the consumption tax hike, beyond the conflict between the public's acceptance of higher rates in the abstract and its dislike for a tax in the specific--part of human nature, like the acceptance of mortality and the fear of death; no wonder they say “death and taxes”—there are basically two competing views of experts. The cons say that raising taxes will depress spending and push Japan into a vicious cycle of recession and declining tax revenues, while the pros say that the market for government bonds will collapse from the ever-growing debt overhang and take the Japanese economy down with them. The first argument is the Keynesian while the second one is more institutional, historical [and] behavioral and is generally preferred by administrators and central bankers. Actually, they are mutually compatible. No government can keep borrowing more and more each year forever and no national government has managed to build and maintain a sustainable social safety net at VAT rates like Japan's or has maintained borrowing at such high levels without serious consequences. I'm not an economist so I don't have an opinion on the appropriate timing, but if you cannot decide that you will raise tax rates two years from now unless the economy is going south then and you're going to pump more money into the economy to try to make sure that won't happen, then I'm not sure you ever can.

Compounding the public's unhappiness is the fact that most of the annual 16.8 trillion yen in savings and renewable buried treasures that the DPJ promised that was going to be used to finance the social safety net and other worthy ventures before the government asked for a tax hike never materialized. But that point is moot because it's going to happen. Noda will have enough votes in both houses to pass the bill even if Ozawa manages to have all 30 of his upper house allies vote against it. Yes, Noda's popularity is likely to take a hit, but it'll be much smaller than if he gave up and drifted. And the LDP and Komeito will also take hits. Remember the story about the two hikers accosted by a hungry? One of them changes into sneaker and the other one says, “Why bother, you're not going to outrun the bear.” so the first one says, “No, but I only have to outrun you.”

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PS: Paul Sracic, whom I referred to in the previous post, has a CNN op-ed addressing the SCOTUS decision on Obamacare. America is increasingly polarized if Sracic is correct, while we in Japan have the opposite problem, which is the political urge to leave no constituency unsatisfied and leaves half the constituency undecided.

Toru Hashimoto Not Answer to Peter Tasker’s Hopes for Radical Solution to Japan’s Economic Woes

Paul Sracic, good friend of Japan since his Tokyo sojourn as a Fulbright Lecturer, shot me this link to a Financial Times op-ed by Peter Tasker. Tasker argues that the result of raising the consumption tax “is likely to be politically and economically disastrous” and instead suggests “more radical measures.” He says that “central bank could go beyond merely increasing its holdings of government bonds and cancel them, too. The target for tax hikes could shift from household spending to corporate savings.”

Broadly speaking, Tasker lines up on the Keynesian side of the never-ending debate between the Keynesian and the institutional, historical [and] behavioral perspectives pitting reputable economists on both sides, though fiscal and monetary authorities in advanced economies mostly line up on the latter. I’m not suggesting that I can settle this debate, but I do know that he is looking to the wrong political figure in Toru Hashimoto as the populist to carry out his proposals. Hashimoto may oppose the consumption tax hike deal between the DPJ, (PNP,) LDP and Komeito, but he’s a small-government neoliberal supported by similarly-minded policy advisers steeped in the Koizumi-Takenaka reforms.

I Think I Misunderestimated (Now) Mayor Hashimoto

The consumption tax hike and the politics around it have been dominating headlines (while the political decision to restart Units 3 and 4 at the Ohi Nuclear Power Plant quickly faded from view, a matter that I intend to take up briefly later), and Ozawa is at the center of attention. What will Ozawa do? What will Noda do to Ozawa? And what will the opposition have to say about it? However, when the dust settles, it will be Toru Hashimoto, the Osaka governor-turned-mayor—not Ozawa—who will be the center of speculation in the lead-up to what looks like a near-inevitable snap election and beyond.

Ozawa and Hashimoto have both positioned themselves in opposition to Noda on the consumption tax hike and the nuclear resets—two of the three major policy issues (a prospective bid to join the ongoing TPP negotiations is the other) that Noda has set his sights on as potential landmark achievements of his regime. Ozawa’s opposition to the tax hike is seen as opportunistic, but it’s hard to reject the argument that it violates the manifesto is a legitimate one, especially when you consider the fact that only a fraction of the multitrillion-yen fiscal savings that was supposed to precede any such talk materialized. Ozawa’s criticism of the nuclear restarts has been an out-of-nowhere revelation and viewed as a typically opportunistic maneuver, but Hashimoto’s last-minute acceptance—a flip-flop with a toothless summer-months-only caveat as fig leaf—is far from the first case where he has made very public turnabouts. Yet Hashimoto is the one that the DPJ, LDP, Komeito and, lest we forget, Your Party are all courting while Ozawa, if he bolts, will struggle just to gain control over the other DPJ dissidents that leave/are forced to leave and, in the case of many of them, will be hard put to win reelection. Hashimoto is all upside while Ozawa is all downside. Why?

Most Japanese voters do not know these two men personally. It’s probably safe to say that most Japanese voters have never even met them*. In fact, we know them almost purely through the media filter. So it is to the media coverage and its background that we should look to for an answer in the first instance. I took a whack at this question during a multiparty email discussion when I addressed a point in an Economist blog post**. I’m reproducing my take below, which essentially formed itself when I watched, at first reluctantly, a recording of a press briefing in the course of my work. And yes, I’ll get back to “ex-Mrs. Ozawa”’s letter. But not now.

*I haven’t, though I worked for a government ministry for years, and Hashimoto and I went to the same high school—many years apart, but there are annual alumni conferences. **I continue to have great respect for The Economist’s published articles but sometimes find blogposts there at fault—no, not yours, my friend—for misunderstandings and/or excessive hedging.

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“The public standing of the prime minister’s other foe, Mr Hashimoto, may have also peaked.” (from the Economist blogpost)

You know, “may” is the key word that renders the entire paragraph--like so much of media reports--worthless unless you have some understanding of the facts of the case. I wouldn't bet either way either, but one thing that the report doesn’t mention is that he has a much wider room for error than any other politician in sight, as can be seen from the way he goes from one position to another like...but let’s skip the simile...on issue after issue without visible harm. The media loves him, not just because he makes great copy, though he does, lots more than Ishihara. Unlike Ishihara, he engages reporters directly. He never evades a question (though he can go on and on, which sometimes should have the same effect), he's never condescending (though he may call you an idiot, or at least your question stupid, if he thinks you are/it is), and never gets testy when he's cornered (though he can lash out furiously when he's frustrated). He's not a bully; essentially, he treats people, politicians, garbage collectors, teachers, and yes reporters as members of civil society who have specific roles to play. He obviously has strong views about what those roles are and how those roles should be played. But he certainly respects the media, from Asahi Shinbun to NicoNico Doga,* and the media respect back. He'll have to change his style if and when he goes directly and personally into national politics, but till then, I think that the love affair will endure, because it's based on mutual respect.

* You should go watch one of his press briefings if you understand Japanese. I don’t think that I’ve ever managed to pay attention to a long—1.5 hours in this case—press briefing mostly uninterrupted by anyone else.

Fleeting Thoughts about Ozawa’s Possible Loss of Control over His Own Fate

57 DPJ members of the House of Representatives—enough to deny the ruling coalition a majority in the lower house if they leave the DPJ en masse—voted against the tax hike bill today. I now suspect that Ozawa will act sooner rather than later regardless of the severity of the sanctions or their timing, not because he really wants to but because many anti-tax hike Diet members will bolt without waiting for him, like nine lower house representatives did in April when the DPJ agreed to let the Noda administration adopt the tax hike. Any more significant and unscheduled defections like that, and his sway over his allies and followers could dwindle rapidly. His hold over his minions has never been as strong as we (myself included) sometimes assume, and the April show of independence was not the first nor last evidence of such. I think this will remind some of Saigo Takamori’s fate. Sometimes, the mikoshi is at the mercy of its bearers. That’s all for now. Back to work.

Very Brief Assessment of Noda’s Performance

This is it. “[Noda]'s done a pretty good job, all things considered. He's done two very important things: set priorities, then stick to them. The Noda administration could have done a much better job of managing the restart process after it took over and it surely could have caved more quickly on the Article 3 Commission impasse, but some of the blame has to go to Edano, Hosono, and to a lesser extent their bureaucracies. It's also mostly missing in action on TPP, but I can totally understand the political need to underplay this while the other two priorities are yet to be settled. You could say that two years of reconciling the manifesto pot pourri and the exigencies of the coalition with reality set the table for prioritization while Hatoyama and Kan in their own ways made prioritization a necessity. Still, it could have been much, much worse. And the Noda administration now seems to be trending upwards even as it pushes restarts and tax hikes. He's giving the public something specific that it wants that is distinct from the actual policies that he pushes.” That’s it for now.

An Addendum of Sorts to the “Post-election” Post

The latest from the off-blog online discussions: “Ozawa's plan seems to be to get as many people lined up against the tax hike bill--the nuclear restarts are a useful throw-in--or at least on the sidelines and dare Noda to kick the nays out. Normally, a compromise can be worked out; after all, the DPJ has no precedent for doing a Koizumi on anyone, let alone enough HORs to lose the house majority. Moreover, Maehara is the most vocal and unequivocal voice on this, and he's been faced down too often on party and policy issues to be taken too seriously. Does a three month suspension for the ringleader, a shorter one for the other nays, and a verbal tongue lash for the abstainers allow everyone to save face and give Ozawa an excuse not to run in the September leadership election or what? Two problems, though. First, it'll be much easier PR-wise for the LDP and Komeito to force a snap election anyway by holding the deficit bond authorization bill hostage. Second, the DPJ won't be able to put together a coherent election platform. “All in all, it looks like a split, with Ozawa taking a good number of people with him--though many of the non-zombies won't bother to make a serious bid for office when the snap election rolls around. Given what I've seen of Noda's modus operandi, I think that he'll make a show of trying to maintain party unity but make the conditions for staying so onerous--three month suspensions minimum for all nays for starters--that Ozawa has no choice but to pick up stakes and leave. I'm not betting the farm on this because I've seen too often people with skin in the game come up with unforeseen solutions, but that is for me the most likely scenario.” There’s more to follow…

It’s a Post-election Grand Coalition… or Instability/Gridlock Followed by Party Realignment

Most of the attention from the media, political analysts and other pundits has been focused on the number of lower house DPJ members that Ozawa can muster to oppose the upcoming lower house vote on the consumption tax hike bill and whether or not the Noda administration will expel them from the DPJ when they do. There is also some talk around the number of DPJ abstentions, which is relevant to the numbers game if the Noda administration decides to kick out the nays but let the abstainers off with a suspension or less*.

The actual numbers—51/54 defections in the lower house mean that the DPJ/coalition turns into a minority there. Such a near-term outcome will certainly be significant politically, and opposition parties. The media will milk it for all it’s worth, and the consequent perceptions may very well affect the outcome of the next general election and its aftermath. However, it is near-irrelevant from an immediate legislative perspective since no legislative bills will be passed before the election without acquiescence from the LDP-Komeito tag team in the upper house.

I am surprised at how little attention is being paid to the parallel political crisis in the upper house, where one MSM report has an anonymous Ozawa capo claiming that the Ozawa group has 18 of its 30 upper members lined up to oppose the consumption tax hike when the time comes for that house to vote on the bill. Again, it is true that this will have little effect on the pre-election legislative agenda for the same reason as the defections in the lower house. But Ozawa only needs 6 upper house defectors to deny an upper house majority to a hypothetical post-election DPJ-People’s New Party-Komeito coalition. And the problem to adding more non-LDP partners to this ménage-a-trois is that most of the non-Komeito, non-LDP opposition will be running fiercely anti-consumption tax hike campaigns (and are irrelevant, as in the case of the Socialists and Communists, and/or insane, as in the case of the Happiness Realization Party). Thus, any coalition for an upper house majority that does not involve the LDP will be exceedingly hard to form—or maintain in the unlikely event that it can be done. This upper house situation will be the one known factor around the post-election circumstances that should drive a Grand Coalition—or legislative instability and gridlock, and precipitous political realignment**. There are too many moving parts in the lead-up to the lower house election to narrow the scope of possibilities. But the upper house situation lends more certainty to the likely outcomes and therefore deserves more attention.

Of course the Noda administration could as a matter of logic do a Koizumi and try to keep the upper house nays in the DPJ. But this will fail since the upper house dissidents will surely follow their lower house sibling exiles into the wilderness.

* From a purely housekeeping point of view, it makes sense for Prime Minister Noda administration hand out, say, a three-month suspension to the defectors—thus keeping them in the tent but out of the September leadership election and letting the abstainers off with a wrist slap. I don’t think that this will happen; the media fallout will be significant. Besides, the nays are likely to bolt anyway, making the Noda administration even more pathetic.

** I have an email exchange on the likely dissidents that I’ve shared with a group of academic friends and their colleagues. I may brush up my end of the exchange for later posting. I also made some observations about the MSM’s treatment of an alleged letter from Ozawa’s ex-wife containing damaging claims about his post-3.11 cowardice, which I may post later.

Memo on the Consumption Tax

Nothing says Happy New Year like talk of a (consumption) tax hike. Noda got the DPJ to go along by pushing the initial raise to 8% back six months from the original proposal to April 2014, and what’s a few months this way or that, no? Ozawa’s Plan A must be to get acquitted in time to mount a challenge in the DPR leadership election next September against a weakened Noda. Must get busy now; in the meantime, the following is a memo that I wrote a little over a week ago around the issue. I hope that you find it relevant. Finally, I wish you all nothing but happiness and joy in the year to come and thereafter.

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1. A majority of the Japanese public believes that a consumption tax hike is inevitable. The 1988 introduction of the consumption tax was highly unpopular with the Japanese public.
2. Big business generally supports a consumption tax hike. There is no overt opposition from SMEs, who, like big business, a) do not like the government's idea of shifting the growing burden of the social safety net on the shoulders of businesses (pushing 20-30 hour workweek employees into the Kosei Nenkin hurts big and small business alike) and b) would like to see the corporate tax instead. The 1988 introduction of the consumption tax was fiercely opposed by SMEs and many other businesses
3. The MSM generally supports a consumption tax hike. The MSM was split in 1988.
4. The LDP has supported a consumption tax hike. The opposition parties were strongly opposed in 1988.
5. Public disgust over the Recruit scandal that contaminated virtually the entire LDP leadership likely had some effect on the1990 election results. Besides, the 1986 election results were exceptional, making the 1990 results look worse that it is in a historical context. The 3% to 5% hike did not keep Hashimoto and the LDP from winning in the 1996 election, already well into the post-bubble decade.

So what's the problem?
1. Public mistrust of the conventional political class. The lack of political leadership and policy consistency has sapped the credibility of both major parties in asking the public to pony up. (That is why the largely symbolic (in fiscal terms) value of a notional downsized Diet is taking on significance.) The DPJ has had a longer distance to fall, which they did because only a small fraction of the promised savings materialized in its first three years in power. (There were of course Hatoyama's Futenma debacle and incoherence and Kan's inability to articulate and execute. Noda has so far proved (sic) pedestrian, though his persistence should prove useful in getting a compromise on the consumption tax.)
2. Poor economy. The argument is that this is not the time to put the brakes on consumption. That's a reasonable argument, although a trigger for 2013, BTW the more likely arrangement, should take care of it. (Economists and analysts argue over the effect on consumption and savings. I'm not competent to go into that; suffice to say that opponents bring up this argument and many of them no doubt believe it.)
3. The battle for the periphery. The DPJ won the (upper house) 2007 and 2009 elections in part by capturing seats in the periphery, many in districts in traditional LDP strongholds--with low-income, elderly demographics, who will feel relatively more pain from the tax hike. (To be fair, the DPJ also win in the metropolitan districts.) The LDP wants those voters back in their fold, while DPJ parliamentarians with insecure seats (presumably skewed heavily toward Ozawa allies and dependents) will be tempted to vote for their constituents' purses.

2012 should be a good year for the economy, while economists largely agree that it will be less so in 2013. Arguably, it's now or never for the Noda administration. But it can't do anything about the mistrust. But neither can the LDP. Public perception that the LDP is opposing a tax hike--and that's only if they actually manage to cohere around a clear position in opposition--for purely tactical reasons will cause significant damage to the LDP as well. One possibility lies in ganging up on the smaller parties and place the bulk of the consequences of downsizing on the proportional seats, make a compromise on a trigger-equipped consumption tax bill, then let Diet members vote their conscience. There is a huge upside/downside risk here, though. The likelihood of lopsided results become much higher with a smaller proportional-seat cushion. And voting their conscience may only delay the onset of thoroughgoing realignment. Also militating against the compromise that I suggest would be the LDP-Komeito campaign alliance, which the LDP would be loath to give up.

Those are my thoughts as of now. I know there is no convincingly overriding scenario here; all I'm sure of is that the LDP can't let Noda have his consumption tax and declare victory, nor can Noda drop the consumption tax hike and go on as if the whole series of events had never happened.

My Thoughts around the Nine Defectors and Beyond

It was more like minutes than hours, wasn’t it? So what kind of people bolted the DPJ today over the prospective consumption tax hike to form a new party? Mainly proportional-only candidates, most of whose prospects of reelection in anything but a landslide by the DPJ are nil, that’s who*. For these people, their best chances would lie in running as bi-candidates in a new party and hope that the new party wins enough votes (and they lose by small enough margins) to allow them to make it back as zombies.

Beyond that, my guesstimate says that the DPJ could win 180 out of the 304 first-past-the-post districts—the DPJ won 227 in 2009—and the DPJ’s 45 proportional-only incumbents would still be in danger of being wiped out**. It’s not a good time to be a DPJ Diet member who doesn’t have a single-seat district to hedge his/her bet and be eligible to compete with all the other bi-candidates for zombie status. But running in a single-seat district will cost you, so it’s not a viable option unless you’re deep-pocketed or willing to bet the farm.

There was another DPJ defector today, but that’s more the subject of comedy. I might go back to it tomorrow.

* Akira Uchiyama(3rd term) South Kanto ranked 1st, among DPJ proportionals; lost Chiba 7th; Ozawa group
Koichiro Wtanabe (2nd) Tokyo 29th among DPJ proportionals, of whom 23rd-29th got in; Ozawa; habitual loser
Juntaro Toyoda (2nd) Kinki 51st, 45th-52nd; Ozawa; repeat loser (one win in 1993)
Mitsuji Ishida (1st) South Kanto 37th, 37-39th; Ozawa; one-time prefectural assembly election loser
Masae Kobayashi (1st) Tokai 39th; 34th-41st; Ozawa; mayoral election loser
Yoshinori Saito (1st) (斎藤恭紀〈１〉（宮城２区）鳩山
Atsushi Chugo (1st) South Kanto 1st , lost Chiba 12th; Ozawa; two-time municipal assembly winner
Nobuki Miwa (1st) Tokai 38th, 34th-41st; Ozawa; four-time prefectural assembly winner
Yoshihiko Watanabe (1st) Kinki 48th, 45th-52nd; Ozawa; two-time loser, hid bankruptcy procedures to remain on DPJ list
** There are ways to develop more detailed estimates, but I’m not sure it’s worth my time unless I’m getting paid for it.

Who Will Jump the DPJ Ship over a Consumption Tax Hike?

For now, only a couple of handfuls, if the Asahi is to be believed. We’ll know in a matter of hours, if not days, but in the meantime, here are a few thoughts around the report that may be useful beyond the immediate future.

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So far, prospective defectors are small in number and are mainly (but not exclusively) first-term Ozawa children (Miwa is a ripe old 69) in the lower house representing the urban expanse between the true outback and the Tokyo/Nagoya/Osaka metropolitan. No upper house names have emerged.

How will they fare in a snap election? Intuitively, not so good. They will have to share the anti-consumption tax hike vote with Your Party, who will also be able to 1) run candidates in more districts, which will help it gather proportional votes, and 2) position itself as the reformist alternative. There are many other factors to be considered, some positive (Yasunori Saito, who has local celebrity status, will rake in votes outside his district; people like Nobuaki Miwa, who have independent political capital, maybe able to wrest away a larger part of the local DPJ chapter than otherwise possible), some negative (political novice rookies may not be able to take much of the local DPJ party machine away with him). All things considered, expect a few other multi-term Diet members as well a rookie or two that have strong local assembly backgrounds to make the leap, calculating that, at worst, they can slip back in on the proportional tickets. Conversely, pure political rookies will not jump ship unless Ozawa jumps with them.

From My Email: Pop Culture, and a Discovery about AKB 48 (What Else?)

A couple of people and I got to talking about W. David Marx and Cool Japan, which got me to thinking about Japanese pop culture. The following is the relevant part of an email, uncensored, with one word corrected, one punctuation mark removed, font changed, and, oh yes, a hyperlink added. Otherwise, RAW. I think that I’ve picked up on something that no one, anywhere, has noticed.

Also, I’m seriously thinking about posting something mean-spirited about Ronald Dore. What do you think?

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The best way to kill off One Piece (which I never liked BTW) would be to have the MEXT political team do a public announcement endorsing it. (On the other hand, PM Noda is a dead ringer for Komawari-kun, if they ever get around to doing a live-action version...)

Speaking of popular culture, look at the following list of AKB 48 members who have finished in the top 10 in voting, with their top finishes.

O Ohshima Yuko 大島優子 1
O Maeda Atsuko 前田敦子 1
O Shinoda Mariko 篠田麻里子 3
O Itano Tomomi 板野友美 4
C Watanabe Mayu 渡辺麻夕 4
C Takahashi Minami 高橋みなみ 5
C Kojima Haruna 小嶋陽菜 6
C Satoh Amina 佐藤亜美菜 8
VO Miyazawa Sae 宮澤佐江 9
O Kasai Tomomi 河西智美 10

"O" as in old-fashioned, "C" as in contemporary, "VO" as in...very old. Old-fashioned means that they would have been the kind of names that were predominant as I was growing up. Let me also note that "Tomomi" is gender-free (岩倉具視, haha）, although most three-syllable "-mi" names are more likely to be conferred on females. Contemporary means the kind of names that girls in their teens and twenties typically have. Very old means Meiji-, Taisho-old. As further proof of how name preferences have changed, there is only one other "-ko" in the whole bunch. (To be fair, her top finish so far has been 38. Next AKB member to bare all?) In fact, beyond these nine most popular members, contemporary names predominate the list. Is this all just coincidence? I think not.

Finally, as an example of: Japan Cool (not Cool Japan) influence .

Personally, I miss the old version . I must be growing old.

Have a nice weekend.

Message Management Missing in Noda’s Honolulu Trade Initiative

I’d been telling everyone who would listen that Noda would take Japan into the Trans Pacific Partnership (TPP) FTA negotiations if only because there was no way that he could back down without becoming the third lame-duck prime minister in the first three years of the Democratic Party of Japan’s hold on power. He made me a little nervous with his one-day delay of the announcement, but he did came through and the threat of secession from DPJ dissidents proved to be a bluff…for now. The TPP negotiations should take another year or more, which means that Noda does not have any related legislative action to worry about during the 2012 regular Diet session. However, the opposition will have a couple of matters with which it will test the prime minister to see if they can erode public trust in his governance. And his DPJ opponents will not be happy about them either.

First, he reportedly gave favorable notice regarding Japanese import restrictions on U.S. beef. Actually I’ve been bewildered by recent talk regarding the Noda administration’s willingness to revisit this issue, specifically to raise the import eligibility of U.C. cattle from 20 months old to 30. Leaving aside my personal views on the issue itself, it seemed odd to me that the Noda administration would make a valuable concession even before the TPP negotiations had started. I can think of no other explanation than that it was an “omiyage,” a present, to make the Noda-Obama go smoothly. Maybe it helped, maybe it didn’t, who knows. I’ve always believed that this tactic, long favored by the Japanese authorities, is demeaning and serves mainly to keep the Japanese political masters happy—whee, I got a lot of applause when I addressed the plenary!, President So-and-So shook my hand! that kind of thing—but that’s beside the point. The problem here is that the Noda administration has so far given no official indication that the beef issue is in play. In fact, the news that Noda notified Obama took the Japanese media by surprise. There’s a good political, if unscientific, reason that Japan is one of the few countries to maintain a 30-month age limit on properly processed U.S. beef. The Japanese public was scared out of its wits by the mad cow disease breakout and the Ministry of Agriculture, Forestry and Fisheries had to go well beyond what the science around the issue required. (In our defense, we are no more (or less) irrational than our American/British/Chinese/…Luxembourgian/…/South Korean/…/Zimbabwean friends. It’s just that we each care insanely about different things. Okay, maybe Luxembourgers don’t, though who knows…) This will cause problems. After all, this is a food safety issue. It has obvious international ramifications, but first and foremost, it’s a matter of domestic regulation. I think that Noda got it ass backwards, and the media, the opposition and his DPJ opponents are going to (rightfully in my opinion) take him to task for it.

Second, the White House announced that President Obama “welcomed Prime Minister Noda's statement that he would put all goods, as well as services, on the negotiating table for trade liberalization.” Now this may seem to you mere recognition of reality. After all, if Noda had said that agriculture, or anything else for that matter, was off the table, his bid to take Japan into the TPP negotiations would have collapsed on the dry dock. However, lobbies and Congress feed off trade issues, so the White House in its press secretary readout obviously did what it could to ensure smooth sailings as far as officially accepting Japan as a TPP negotiating member with as few domestic strings as possible. (A negotiator always looks to expand his/her mandate.) The Japanese side, incredibly, not only failed to anticipate the White House spin but did not put out any statement regarding the bilateral meeting except a bland, all-points-covered summary from the Ministry of Foreign Affairs (MOFA). The prime minister’s team—Kantei?—missing in action. (See if you can find anything at the Kantei website.) It wound up issuing a denial that Noda had said any such thing. Bad for relations with the White House, and fodder for opposition guns when the Diet resumes operations on the Prime Minister’s return from Honolulu.

Rumble at the Yomiuri Giants and Most (But Definitely Not All) of the Media Goes Bananas

…It’s about time, so why not reboot here…

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You know that anyone who's looking for proof of Japanese media bias need only look at the Yomiuri sports pages and how they basically serve as the baseball powerhouse Yomiuri Giants’ fanzine. (Actually, I welcome media bias because it takes less time to go through them when you more or less know where they are coming from. They also give you media-driven baselines from which to make guesses at how public opinion will be trending, particularly on those rare moments—say, Kim Jong Il's admissions regarding the abductees—when Yomiuri and Asahi angles converge.) Well today, there was an incredible diatribe released by the representative/GM of the Yomiuri Giants (a former Yomiuri reporter proving that not all amakudari’s are necessarily handpuppets), who, if his lengthy statement (full text starts here is to be believed, apparently refused a bribe from powermonger and all-around meddler Tsuneo Watanabe in the form of more power and a promise of eventual elevation to CEO in exchange for going along with Watanabe's lies—not the rep/GMs words, but there’s no other way to put it—around his attempt to overturn Giants personnel decisions to which he had already given consent.

The late afternoon-early evening news broadcasts all appear to be featuring the story prominently—all, that is, except Nippon TV. I’ll give you one guess which media group owns Nippon TV.

But what am I doing watching TV when the rest of the Japanese world is working? Actually, this is relevant to my line of work, as it should spell the end of Watanabe's role as political fixer—anything fixer, really. If Ichiro Ozawa had held any hope that Watanabe could reprise anything like his 2007 role as go-between for an aborted deal between Ozawa and then Prime Minister Yasuo Fukuda for a Grand Coalition, it’s gone now. This diminishes the LDP's old guard as well, since Ozawa was their most familiar and likeminded interlocutor. An era is passing, and this incident is part of it.

Let’s see what if literally anything tomorrow’s Yomiuri has to say about this.